Innovation and Adaptation for a More Resilient Nutrition Industry Supply Chain
Supply Chain
As we approach year-end and take stock in the current state of the nutritional supplement industry supply chain, we are seeing continued improvement with a mix of challenges and opportunities. For the industry overall, I believe we are at a kind of crossroads of innovation and adaptation.
The global events of the past few years impacted supply chains across all sectors and the nutritional supplement industry was not an exception. The COVID-19 pandemic had a significant impact on the supply chain, exposing vulnerabilities, causing disruptions and highlighting the need for innovation and adaptability. However, the industry’s supply chain has been gradually recovering, and there is now a unique opportunity to learn from previous experiences to develop strategies for a more resilient and sustainable future.
From a market perspective, though we’re not seeing the rapid growth of a few years ago, we are still continuing to grow at a more stabilized rate providing a chance for the industry to take a deeper dive into supply chain management resources and technology to better leverage the capabilities available to us and achieve greater efficiencies. Contract manufacturers, brands distributing products and other industry players now need to look at how we can best balance the use of innovative technology and ideation with the ability to quickly and seamlessly adapt processes to address challenges and better manage the supply chain going forward.
Assessing Today’s Supply Chain Challenges
Ingredient and Raw Material Sourcing
As we review some of the biggest challenges currently impacting supply chain and get to the heart of the industry, securing a reliable and diversified supply of ingredients and raw materials is crucial. Geopolitical factors, severe weather and market fluctuations can create uncertainties globally, requiring more strategic sourcing partnerships to be able to fulfill market demands, which must be a priority.
Packaging Shortages with a Focus on Eco-Friendly Materials
During the height of the pandemic, issues with packaging were primarily tied to overall shortages of plastic and resin needed for brands’ specific packaging requirements. Today, we’re facing a different set of challenges driven by a growing emphasis on sustainable and eco-friendly packaging materials.
As the industry, brands and end consumers all increasingly recognize the critical need to address environmental issues, this growing demand leads to packaging shortages for more sustainable materials. As a result, contract manufacturers, product developers and brands need to explore more innovative solutions to balance sustainability and packaging availability.
Transportation and Logistics Navigation
Transportation concerns remain a major factor in supply chain management. Logistics navigation has become extremely complex, and continued fluctuation in gas prices and port congestion all contribute to transportation hurdles and potential shipping delays.
The combination of challenges facing the industry today intensifies the need to have more enhanced transportation management strategies. This includes partnering with freight brokers, logistics firms and transportation companies who are reliable, have advanced tracking and traceability capabilities, and prioritize shipping timeliness as a core value.
Maintaining Product Safety, Quality and Regulatory Compliance
While navigating through the various current supply chain issues, ensuring product safety and adhering to strict regulatory standards is essential. This is a non-negotiable factor for our industry.
Contract manufacturers and others need to prioritize quality control and supplier audits amid supply chain disruptions. The need for enhanced traceability is also critical to maintain consumer trust and uphold brand reputation.
Supply Chain Management Strategies and What We’ve Learned
Though the industry still has its share of challenges, and global events including the pandemic exposed new and pre-existing vulnerabilities, in terms of supply chain management I think we are now much better positioned to use all of our learnings to better strategize, plan, prepare and have a greater visibility over processes as a whole for a more resilient future.
Enhance Collaboration
Collaboration is definitely key to building a resilient supply chain. For manufacturers, this means strengthening and creating strategic relationships with suppliers and distributors and fostering open and transparent communication channels up and down the chain.
Closer collaboration allows us to not only quickly respond to challenges, but also to promote agile adaptations to overcome arising challenges. It’s also vital to ensure everyone understands their roles and responsibilities in managing disruptions and that these roles are clearly communicated.
Embrace Technology Advancements
Embracing technology is no longer optional, but it’s imperative for managing supply chains in today’s environment to better prepare for future disruptions. This includes not only utilizing advanced supply chain management software technology that is available, but it is also as basic as evaluating and using data analytics that a contract manufacturer or other industry organization may already have in-house. Having data visibility internally, and understanding what trends and patterns the data is conveying is an incredible resource for analysis and forecasting. Leveraging the power of real-time tracking and procurement management tools for things like purchase order status, is also very critical.
For overall supply chain management, Enterprise Resource Planning (ERP) system optimization is fundamental. Once an organization has migrated data and integrated an ERP system and has successfully completed the initial rollout phase, they should be taking a deeper dive to become better educated in fully understanding the capabilities of the system to maximize the potential. This includes thinking about how the ERP can create efficiencies, streamline processes and simplify operations in areas including managing procurement, lead times, managing inventory, inventory turns and minimum days of supply, among others.
Focus on Sustainability Sustainability should also be a core focus when developing strategies to manage and maintain a resilient nutrition industry supply chain for years to come. Today’s manufacturers and brands need to take more of a proactive approach to prioritizing sustainable sourcing practices, providing eco-friendly packaging solutions, and implementing responsible waste management.
Sustainability practices not only contribute to the health of the environment, but also resonate with consumers. This can result in strengthening your brand and promoting brand loyalty, among other benefits.
Take a Proactive Risk Mitigation and Contingency Planning Approach
Risk mitigation and contingency planning remain cornerstones of successful nutrition industry supply chain management. Building a more resilient supply chain requires a more proactive risk mitigation and contingency planning approach, which include some key steps for organizations to think about, such as the following:
• Conduct a thorough assessment to identify potential risks and vulnerabilities in the supply chain.
• Consider both internal and external factors that could impact the supply chain.
• Prioritize risks based on their potential impact on the supply chain and the likelihood of occurrence.
• Reduce dependency on a single source by diversifying suppliers and resources.
• Explore alternative supply options to enhance resilience.
The nutritional supplement industry has learned invaluable lessons during the pandemic and beyond, equipping it with the knowledge and tools to develop strategies for a more resilient and adaptive supply chain. By prioritizing collaboration, embracing technology and adopting sustainable practices, the industry is better poised to navigate future challenges effectively and provide consumers with reliable and high-quality products in the years to come. NIE
Jeohvan Montoya, with more than 15 years of industry specific experience, has held several key positions within nutraceuticals, such as costing specialist, purchasing manager and senior R&D/product development manager. Currently, Montoya is the procurement manager at Lief Labs in Valencia, CA where he is responsible for realizing the strategic objectives for the supply chain function through assessment, clear planning and effective execution. He can be reached at jeo@lieforganics.com.
